Article: Top 3 HR disruptors for growth

Strategic HR

Top 3 HR disruptors for growth

Growth in the HR industry will be disrupted through the way services will be designed & delivered in the coming months
Top 3 HR disruptors for growth

Since the last time we carried a story about the HR industry in 2013, the industry of HR has continued to move at the speed of light. Market sentiments have changed, economic conditions continue to become tighter and technology continues to evolve at breakneck speed. With such disruptive changes happening in the broad macro-economic environment, the industry of HR in India is caught in the powerful whirlpool of change. Like previous years, we interviewed leaders from several HR service organizations to gauge and assess the nature and direction of the industry, and what would it take to survive and grow in the coming times. Besides that, we also interviewed consumers of HR services who gave us their perspective on how their expectations from the industry will evolve. One common conclusion that our interviews reveal is the fact that the gap between expectations and delivery is closing quickly, and the coming times will be characterised by growth brought forth by organic expansion of the service landscape. This growth, however, will be driven by disruptions in the way services will be designed and delivered in the coming months. As mentioned, these disruptions will be an outcome of the way consumers demand HR services and the manner in which service delivery will evolve as the market matures. From the viewpoint of a consumer or provider of services in India, it is important to understand what these disruptors are.

Adaptive and customized–The key to the future

Industry leaders across India reflect one common sentiment about the delivery of HR services in the coming times. Most believe that “dynamism”, “flexibility”, and “customization” hold the key to HR service delivery in India. The age of standard off-the-shelf services will start to decline, and the industry will collectively tread the path of maturity, characterized by services, which are carefully designed and delivered with a greater level of customer involvement. Automatically, customization will come to the fore. While the volume of repetitive or “transactional “HR processes continue to grow, HR in organizations expect much more from a service provider than what they did 12 months back. This change is an outcome of two trends– more sophistication of HR technology products and great pressure on HR to justify investments in human capital for business sustenance.

The Indian growth story, unlike those in other economies, was characterized by unprecedented expansion. Organizations grew exponentially, and the need for quality leaders has continued to grow over the years. At the same time, organizations continue to grapple with engagement as leaders fail to inspire, and businesses continue to cut costs. Chaitali Mukherjee, Country Manager, Right Management India says, “Most of the Indian growth story has been unplanned and the slowdown in hiring has resulted in business plans in most Indian companies not seeing completion in the last 24 months.” Most organizations attribute growth in the coming times to be closely linked to general engagement levels of talent and quality of leadership within the organization. As a result, traditional paradigms of HR service delivery will cease to exist and service quality will become an utmost differentiator. Leaders from consumer and service organizations both agree that quality in the coming times will be a factor of a service provider’s ability to flexibly adapt to the unique challenges of the business. Service relationships will, thus, depend on how well a service provider is able to provide customised contribution to an organization’s growth story.

From “solutions” to consulting

Until now, many consider the HR industry in India to be at the stage where both consumers and providers of services are in a constant endeavour to match needs with delivery. While it is typically a characteristic of a low maturity market, most leaders believe that the times are changing. The leaders who participated in this study unanimously agree that conversations between a buyer and seller have moved from “cost-based” to “value-based” conversations. Typical value-based conversations are made up of the partnership to produce some definitive business outcomes.

A. G. Rao, Group Managing Director at Manpower Group, says, “The recruitment industry will rapidly move toward vendor managed staffing (VMS) and managed service provider (MSP) model, and along with that the expectations from the client will also rise.” Besides that, organizations are also opening up to the idea of multi-year deals. In the last 12 months, there have been several examples of organizations entering multi-year contracts with service providers. This demonstrates that organizations and business leaders are putting greater faith in HR service companies and create partnerships to enable execution of business objectives. Vinay Kumar, Principal Consultant and Director at the learning services company C2C Consulting says “Service organizations and learning departments will look to work in a more collaborative and long-term manner to make service relationships more value-adding.” The same trend is reflected by both buyers and service providers across all segments.

When an organization considers long-term relationships and more strategic involvement from an HR service partner, conversations automatically move from provisioning of solutions to execution of a business strategy. HR service organizations, therefore, have to build the skills internally to act as trusted advisors to companies. Unfortunately, most consumers and providers of HR services in India agree that this industry is rarely able to attract some of the best talent.

Krish Shankar, Head of HR, at Philips says, “As a consumer of HR services, most Indian companies feel that the best HR talent in the country does not view the HR service industry as a viable career path. As a result, there still exists a big gap as well as a huge opportunity for HR talent in the country to steer their career toward.” This is a disruptive change likely to happen in the coming months. As much as service consumers, HR service companies will be fighting for the best talent to take up critical positions who can act as a consultative interface between services and service consumers.

There is, however, one core area where a majority of the HR service consumers feel that there is a need for service providers to gear up and pay attention. While buyers have a choice of several reputed international brands, many buyers unanimously agree that most global organizations fail to customize their learning according to local condition. S. K. Dutt, Head-Group HR, at ABG Shipyards says, “This is a significant opportunity for local organizations to gain advantage over reputed global brands owing their deeper knowledge of the Indian market conditions.” Global service companies need to ensure that they customise their product offerings based on local conditions.

The emergence of SMEs and MSMEs

Traditionally regarded as low-margin-low-volume segment, the small and medium business sectors have not attracted too much attention from HR service companies. But this is set to change. Experts across the breadth of the industry believe that service companies from now on will focus on SMEs/MSMEs very closely as several developments make this sector much more lucrative than before. First of all, the number of SMEs and MSMEs in the country has mushroomed significantly thanks to favourable government legislations. There are a number of young entrepreneurship firms that have emerged in recent times and the trend will continue to grow. These small and medium businesses will be in need of the entire spectrum of HR services starting from the transactional to the high value-adding. Considering the small and medium business segment is comprised of companies which do not have well planned HR organizational structures, the need for professional HR services will continue be high in this segment.

Nishant Rao, Country Manager of LinkedIn India, says, “Technological advancements have made it a level-playing field for companies in all sizes and shapes. Easy access to social media and analytics resources makes it easy for small and medium businesses to compete with big businesses in all aspects of human capital management, beginning from talent sourcing, employer branding, or talent analytics.” It is likely that the coming months will show a huge scamper among HR service companies in the SME/MSME space.

While challenges abound in the HR industry in India, this is also a time of great opportunity for HR service organizations in India. Consumers and providers of HR services unanimously agree that great times lie ahead in the HR industry in the coming times. The industry is set to tread a path of maturity, expectations and delivery are getting aligned, and the industry will likely become one of the most viable career alternatives for talented professionals in the country.

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Topics: Strategic HR, #HRIndustry, #ChangeManagement

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